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When did it become OK to play political Calvin ball with the faith and good credit of the United States of America? Such are the hidden whispers that the debt ceiling will be used as yet another gun to the head of America, a hostage taking bargaining chip, in spite of the claims to the contrary.

With Spain now getting a bail out all to pump up their insolvent banks, one might wonder how did we get here in the first place?

We actually are on the precipice, with a key critical Geek vote on whether or not they will default on their international bail out. Sitting on the edge of a cliff, a review of the European sovereign debt crisis and how we got here is at hand.

What the hell happened is complicated. Greece is not the same as Ireland, nor is Spain the same as Greece. Ireland's sovereign debt crisis was the direct result of their financial crisis. Greece, on the other hand, had long standing structural problems with their economy. Nor are their economies the same although treating them as such originally was part of the problem.

The St. Louis Federal Reserve Research Director Christopher Waller gave a presentation on the the European Debt Crisis. The entire May 8th, 2012 lecture is below. The focus is on debt to GDP ratios, the European Union and interest rates for sovereign bonds. We learn about the European Union's major financial structural problems versus how exactly the debt happened. There are plenty of specifics and this lecture is concise, accurate in it's scope. If you don't understand European Sovereign Debt fundamentals, watch this lecture in full and you will.

Moody's Investors Service says that it considers Greece (C/no outlook) to have defaulted per Moody's default definitions further to the conclusion of an exchange of EUR177 billion of Greece's debt that is governed by Greek law for bonds issued by the Greek government, GDP-linked securities, European Financial Stability Facility (EFSF) notes. Foreign-law bonds are eligible for the same offer, and Moody's expects a similar debt exchange to proceed with these bondholders, as well as the holders of state-owned enterprise debt that has been guaranteed by the state, in the coming weeks. The respective securities will enter our default statistics at the tender expiration date, which is was Thursday 8 March for the Greek law bonds and is currently expected to be 23 March for foreign law bonds. Greece's government bond rating remains unchanged at C, the lowest rating on Moody's rating scale.

Moody's understands that 85.8% of debtholders holding Greek-law bonds issued by the sovereign have agreed to the exchange, with the vast majority of remaining bondholders likely to be drawn in following the exercise of Collective Action Clauses that will be inserted pursuant to a recent Act by the Greek parliament. The terms of the exchange entail a discount -- a loss to creditors -- of at least 70% on the net present value of existing debt.

Jeb Bush and Newt Gingrich just published an OpEd in the Los Angeles Times arguing that states would be wise to consider filing bankruptcy to relieve their financial troubles. They cite three states, California, Illinois and New York, while failing to mention the angry elephant in the living room with similar problems, Texas.

"So why haven't we heard more about Texas, one of the most important economy's in America? Well, it's because it doesn't fit the script. It's a pro-business, lean-spending, no-union state. You can't fit it into a nice storyline, so it's ignored," said Business Insider

Texas is a major inconvenience to Bush and Gingrich. They lay the financial problems at the door of unions and state employee pensions:

"The lucrative pay and benefits packages [read pensions] that government employee unions have received from obliging politicians over the years are perhaps the most significant hurdles for many states trying to restore fiscal health." Jeb Bush, Newt Gingrich, January 27

If strategic defaults spread in part because of this new uncertainty over foreclosure and who has the title to the home, the banks and the mortgage backed securities market would be put in a dreadful position. The day in and day out cash flow expected from millions of mortgage principal and interest payments would be impacted far more than it is already, with the banks unable to access their collateral to stanch the bleeding. Insolvencies among the banks and the investors holding mortgage securities would certainly rise. Numerian

The Ultimate Question

So deadly I wonder if few dare to even ask it?

Can these massive bail outs cause the United States to default on it's own debt?

There. I said it.

Honestly I don't know the answer but it is something I sure want answered. Otherwise it's like we have the bad uncle here, the gambling addict who we bail out and bail out yet he keeps ending up in Las Vegas only to be killed by a gang of loan sharks after we're out our life savings.

Is that scenario possible?

Let's find out.

Economists are now tallying up the numbers and estimating the effect of the latest bail out on the federal deficit and it ain't pretty.